March 10, 2005

Have you ever left a management strategy session and said, “So and so doesn’t know nearly as much as he thinks he does”?

Bill Starbuck wouldn’t be surprised if you did. Starbuck, the ITT professor of Creative Management at NYU’s Stern School of Business, has studied the opinions expressed by managers in strategy meetings and concluded, “Managers often have badly distorted pictures of their businesses and their environments.” Six out of ten in a meeting, the professor determined, are likely to have perceptions that are “badly distorted.”

Starbuck gave a page of whys. One bulleted point relates to the good blogs could do.

·Managers trust “news articles and other sources of questionable reliability” instead of skeptically assessing the “facts.”

Take this “fact” from last week’s WSJ:

Some eight million Americans now publish blogs and 32 million people read them, according to the Pew Internet & American Life Project.

The Wall Street Journal’s story goes on to suggest blogs may be a magic answer to a big question in business, “How can we find more customers?”

But Pew’s estimate looks like another widely accepted fact that helped hype the dot com boom:

Internet traffic will double doubles every 100 days.

As The Economist reported in Exaggerated Figures Inflated the Telecom Bubble,

“The claim assumed unimpeachable status when it appeared in a report published by America’s Department of Commerce in April 1998. Unfortunately for the telecoms firms that rushed to build networks to carry the reported surge in traffic, it wasn’t true.”

In the end $757 billion dollars were allocated and mostly lost by high tech companies who based their strategies on this inaccurate “fact.” For example, Level 3 Communications execs told me that fact was discussed in their strategy meetings.

But blogs have the ability to help execs based their decisions on more reliable facts. It took less than a day for bloggers to show the eight million blogs with 32 million readers could be a wildly inaccurate assessment. Check it out here. (BTW, read all the way down Michele’s analysis to make a fair and accurate assessment.)

What does this mean? A lot. Real time fact checking (in or following meetings) will make managers more careful about shooting from the lip (confidently spouting facts that they haven’t really thought through).

Ultimately it will help all decision-making teams follow Professor Starbuck’s prescription: When organizations base strategies on their manager’s perceptions, they need to draw from those with a record of accuracy while discarding input from the rest.

How can four out of ten managers separate themselves from the six that have “distorted” facts? They’ll be the ones checking the blogs and skeptically reviewing unreliable sources in the MSM.

About Dylan Schleicher

Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.